Thursday, September 30, 2010

Telkom Kenya Cuts Broadband Rates By 50%

Telkom Kenya has announced that it has reduced broadband costs by 50% as part of a one-month promotion. The telco claims that the new promotion has been informed by market research pointing to an increase in demand amongst students and young professionals. Telkom Kenya CEO Mickael Ghossein commented: ‘If you were spending KES150 (USD1.78) to buy an internet bundle of 50MB you will now be able to get 100MB for the same amount; for KES850, you will get 1000MB instead of the 500MB that you got previously’. Industry insiders view the move as an attempt to secure its leadership in the burgeoning broadband market. Based on retaliatory trends exhibited in the past, rival Safaricom, which recently entered the Kenyan broadband market, is expected to announce a similar move in the near future.

In other news, Telkom’s move has increased the pressure on Kenya’s long-standing internet provider AccessKenya, which has focused on corporate leased lines and high-end residential customers since its inception. AccessKenya announced this week that its turnover dropped by 17.5% to KES876 million at the end of 1H10; this year the firm opted to increase bandwidth capacity to its customers but freeze its prices. A company spokesperson said that growth of the firm's revenues would depend on ‘strong growth in both the corporate and residential customer base, driven by higher speeds and lower costs offered to customers’. However, Telkom’s move suggests that if AccessKenya does lower its charges, its income may well be diminished even further. According to AccessKernya, the corporate leased line segment is currently its core source of income, accounting for 92% of the firm's revenues in 1H10.